Lending may be down overall, but investors are starting to return to property
ABS home lending figures for June released yesterday showed investor home loans have ticked upwards for the first time in 11 months.
Owner-occupier lending rose 2.4 per cent in June, and investor lending sneaked up slightly by half a point. It's better than analysts had predicted, although the positivity was restricted to lending on existing stock; borrowing for renovations dropped 2.3 per cent and by 1.2 per cent for new-builds.
Cheap money has something to do with this change of fortunes for lenders and sellers. Reserve Bank governor Philip Lowe will be fronting the House of Representatives economics committee on Friday to talk about it; he's facing a grilling on the RBA's rationale for cutting the cash rate twice in the past quarter.
Not that these grillings seem have much of a material impact. A case-in-point proving that it'll take more than a rumble-in-the-jungle style pasting by a royal commission to keep a big bank down, CBA boss Matt Comyn recognised the positive signs from investors when unveiling an $8.49 billion cash profit for 2018/19 yesterday. Imagine what those numbers are going to look like once borrowers start coming back in force.
Australia's developers and builders will be hoping the joy extends to their patch soon. The HIA's Performance of Construction Index figures for July were released yesterday, which showed a continued slowing of the sector. The index overall currently sits at 39.1 per cent, falling 3.9 points in July; a rank below 50 represents contraction.
In July, figures for both home construction and new home orders remained negative for the 12th straight month. Multi-residential unit construction fell another 0.2 points; it has been down for 22 of the past 24 months.
This is the backdrop to yesterday's call by Australian Industry Group ahead of a Council of Australian Governments meeting in Cairns today, calling for a shake-up of construction training to address a growing skills shortage. Apprentice and traineeship numbers have fallen from 446,000 in 2012 to just shy of 260,000 last year. This op ed by AiG chief, Innes Willox lays out the extent of the problem.
The next cab of the high rise defect rank: waterproofing
Today's Fin has a couple of stories looking at the direct correlation between margin squeezing of subbies by project managers and sub-standard workmanship on major projects. It quoted a report by Deakin University's Nicole Johnstone which said while cladding is a major problem, water damage caused by cost-cutting and slap jobs will be more widespread, and far more costly.
Not that creditors of Ralan Group had the chance to find out if this was to become their lot in life. A cohort of commission-only salespeople for the collapsed developer and customers in line to lose their unsecured deposits marched on NSW parliament yesterday, in an effort to get someone - anyone, really - to help them get their money back.
A lesson for developers: don't use off-the-plan apartment deposits to cover your costs. Queensland's Office of Fair Trading is investigating Ralan Group for this practice, and this will extend to Ralan founder, William O'Dwyer.